On my smart phone I have two apps called TheFind and Red Laser. They allow me to effortlessly comparison shop wherever I happen to have 3G. This means I can comparison shop within the walls of any brick-and-mortar retail establishment. I have become what some have coined an “empowered shopper.”
In a WSJ.com article by Miguel Bustillo and Ann Zimmerman state that on Black Friday of 2009 empowered shoppers represented .1% of all shoppers that patronized brick-and-mortar retail stores. On Black Friday 2010 empowered shoppers represented 5.6% according to data gathered by Coremetrics.
How worried you are about this trend is dependent upon what type of business you are. If you are a provider of unique or vital services or utilities this trend may be interesting, but not alarming. If you are a seller of things online, this problem is not really new to you as online retailers have always been susceptible to instantaneous price comparison. But, for brick-and-mortar retailers this trend may be alarming. To some it may, like so many other technologies, represent the end of retail as we know it.
This trend may be alarming, but it does not represent the end of brick-and-mortar retail – just the end of it as we know it. These apps like so many other technologies will not ruin retail. The internet has not ruined newspapers or magazines (although it has certainly strained things) and Facebook has not completely ruined face-to-face interaction with your friends.
Here are some suggestions, from the marketing professional perspective, we have for our friends in brick-and-mortar retail:
1. Capitalize on the same technology that threatens to take business away
When an empowered shopper uses an app like TheFind or Red Laser they sometimes find the lowest price at an online retailer like Amazon.com, but other times they find the lowest price at another brick-and-mortar retailer. Why can’t you be that retailer? These apps allow you to place ads that can be targeted to app users in searching for certain things and even in certain places.
2. Create a compelling value proposition
Your value proposition represents everything you offer the customer. The whole package – your product, your service, your warranties, the knowledge of your sales staff, your financing, even how your store looks. How well do all these things fit together to offer the best value for your customer.
Keep in mind that value does not always mean cheap. Car companies like Honda and BMW are still very successful and offer strong value propositions despite the fact that they do not sell the cheapest cars.
3. Exclusivity and Bundling
Another way to combat the negative effects of empowered shoppers is to offer unique product and product bundles. An example of a product bundle for let’s say a small computer retailer would be to bundle and discount several peripheral items (printer, printer cable, monitor, warranty, etc) with the purchase of a PC.
Exclusivity and bundling has worked well for Toys R Us, who has struck several exclusivity deals with toy manufacturers.
4. Know what motivates your target audience
Price is only one off several things that motivates customers – although it might be the most important thing (exhibit A- Walmart). Price is the only thing these apps compare. Are your prospects motivated by customer service, buying experience, expertise…? Unless you can directly compete with Walmart’s pricing, it behooves you to try an angle other than price with your target audience. I wrote a pretty good post on motivation here.
5. Get your shop online
Compared to the cost of going out of business, getting an ecommerce enabled website is relatively cheap. For twenty-somethings, if your business does not have a website, it might as well not exist. There are many open source eCommerce tools available to small business. One that we regularly customize for our clients is called Magento. It takes a little work, and possibly a little help from an expert, but using these types of tools makes getting your shop online more feasible than ever before.
Those who are slow to adapt to new technological innovations are bound to lose ground to competitors that do. These new technologies are wonderfully empowering to businesses and consumers alike.